60 Minutes had another exceptional show last night. I'll give you the low down on the 'placebo effect' from antidepressants later, but first Scott Pelley reports on a new jobs program for people trapped in unemployment:Meet the new underclass -- the four million Americans who have been unemployed for more than a year. With every additional week out of work, their chances of finding a job dwindle. It turns out that many employers don't want to hire the currently unemployed. Enter Joe Carbone , who is determined to return the American dream to the long-term unemployed in Connecticut. And he's succeeding, one job at a time. How's Carbone doing it? Scott Pelley reports.
We've seen some improvement in the job market lately. But there's something stubborn about unemployment. Never in the last 60 years has the length of joblessness been this long. Four million people, a full third of the unemployed, have been out of work more than a year. They've been severed from the workforce. Ben Bernanke, chairman of the Federal Reserve, calls it "a national crisis." To understand what's happening, we went to Stamford, Conn., to see an experiment that might just offer a way back for Americans trapped in unemployment.
I have embedded the video clip below. It's a must watch. As I've stated many times in my blog posts, the real crisis of capitalism is unemployment, especially youth unemployment. A whole generation of young people will be out of work, impoverishing countries.
And even though the U.S. recovery is finally taking hold, let me show you some scary charts below, courtesy of Calculated Risk (click on charts to enlarge):
This graph compares the job losses from the start of the employment recession, in percentage terms for the Great Depression (rough estimate) and the 2007 recession.
Although the 2007 recession is much worse than any other post-war recession, the employment impact was much less than during the Depression. Note the second dip during the Depression - that was in 1937 and the result of austerity measures.
This graph shows the job losses from the start of the employment recession, in percentage terms for the post war recessions. This shows the depth of the employment recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis - similar to the lingering effects of the Depression.
Pretty scary stuff considering policymakers are repeating the same mistakes that led the world into the Great Depression. Nowhere is this more evident than in Greece where the Greek experiment threatens to throw the country into social anarchy.
On this, Ambrose-Evans-Pritchard of the Telegraph reports, Can a return to the drachma save Greece as unemployment soars?:
Greece’s unemployment bomb has detonated. After a deceptive calm, the surge in job losses since last summer is shocking even for those who never believed that combined fiscal and monetary contraction could possibly lead to any result other than ruin.A variant of this lies in store for Portugal as its "internal devaluation" starts in earnest. The young Schumpeterians in charge of the Portuguese economy insist otherwise - cocksure that shock therapy will triumph without the cushion of debt relief and devaluation - but events have a habit of demolishing dreams.
In November alone 126,000 Greeks lost their jobs in a country of 11 million, equivalent to three and a half million Americans in a single month. The unemployment rate jumped from 18.2pc to 20.9pc.
This has not yet fed through into social breakdown. Greeks receive unemployment support for an average of thirty weeks, with a ceiling of €454 a month, according to Professor Manos Matsaganis from Athens University. Those with civil service tenure are placed on labour reserve for two years at half their basic pay, or a third of their actual pay.
Once these cushions are exhausted, Greeks are on their own. The monthly ratchet effect will then become painfully evident. It is why the Orthodox primate Hieronymos II warned in a letter to the prime minister that ever further doses of the same "deadly medicine" is becoming dangerous.
"The voices of the desperate, the voices of Greeks are being provocatively ignored. Fear is giving way to rage and the risk of a social explosion can no longer be ignored by those who give orders and those who execute their lethal recipes," he said.
Dimitra Noussi, who runs two homeless shelters and a soup kitchen for the City of Athens, said the crunch comes once people have been unemployed for five or six months and cannot pay the rent. Most fall back on the kinship network but there comes a point when critical mass overwhelms even this cultural backstop.
"I’m afraid we’re going to see an unbelievable increase in numbers. We’re suddenly starting to see people in their fifties coming in, and even families with children. They feel humiliated and desperate. I never thought I would see such a thing in my country."
It is against this backdrop that the EU-IMF Troika is (rightly) imposing a further 150,000 public sector job cuts over three years, without "wrongly" offsetting measures to prevent the collapse of private industry. The EU "Marshall Plan" promised last June never actually happened.
The Greek state is €7bn in arrears to companies; manufacturing contracted at 15.5pc in December; and a further 50,000 small firms are expected to go bankrupt by July. The Labour Institute thinks the economy will contract by another 7pc this year.
There is no chance that free enterprise can pick up the slack in the foreseeable future as the state is dismantled, even if premier Lucas Papademos reaches a debt deal with Germany’s Wolfgang Schäuble and staves off default in March. Unemployment must inevitably punch higher.
One can see why the high priests of the EU Project wish to prevent elections taking place in April. The political centre is disintegrating, with the once triumphant PASOK party down to 9pc in the polls and New Democracy at 18pc -- each party reduced to a pro-Memorandum rump after the mass expulsion of dissidents, and each stunned almost senseless.
The 'Indignados' in Syntagma Square replay with mocking cruelty the immortal speech of PASOK leader George Papandreou, gushing that "there is enough money for everything." Voter sympathy is splintering to the hard Left and hard Right.
The latest best-seller is the Greek translation of Heinrich Winkler’s "Weimar 1918-1933: History of the First German Democracy", narrating how an indebted Germany pursued the same deflation policies under the Gold Standard as Greece is now pursuing under EMU - with the same results. The book culminates in the Reichstag elections of July 1932 when the Nazis and Communists between them won half the seats, and Weimar died.
Such parallels are always inexact. The radical parties of Syriza and the Democratic Left are not authoritarian. Yet their ascendancy surely threatens to shatter the existing order. "If we achieve a Left-dominated government, we will politely tell the Troika to leave the country, and we may need to discuss an orderly return to the Drachma," said Syriza MP Theodoros Dritsas, choosing his words carefully.
The news that Iceland has regained its investment grade rating - with unemployment down to 6pc - comes as a timely reminder that countries can indeed go it alone and live to tell the tale. Though of course, Iceland’s debts are in sovereign krona, not Mr Schäuble's euro, and Iceland exports a lot of aluminium.
Mr Papademos warns that default and EMU-exit would lead to "uncontrollable economic chaos". But is that not already the case? No Greek bank has been able to issue a letter of credit accepted anywhere in the world since November. Large Greek companies are having to relocate their headquarters to Bulgaria in order to conduct basic trade.
The "drachma risk" has already killed investment. Greece is suffering the anticipated consequences of EMU exit without the benefits, so it might as well lance the boil, impose capital controls, and create a new banking system (as Iceland did). Such catharsis might start to unlock €60bn of cash savings in gold, dollars, German euro notes (letter `X’, Greece `Y’), and such-like, sitting in the proverbial mattress. Foreign investors might start to nibble again, once the Greek exchange rate reflects reality at around seven Chinese yuan.
Angelos Tsakanakis from the think-tank IOVE is exasperated by such defeatist thinking, fearing serial defaults and legal mayhem. "If your kitchen is on fire and you jump out of a third floor window, you may be lucky. But isn’t it more sensible to try to extinguish the fire?" he said.
Mr Tsakanakis said Greece has clawed back 15pc in labour cost competitiveness since the crisis began, closing part of the intra-EMU gap. The EU task force - not to be confused with the Troika debt-collectors - is half way through a quiet revolution that should soon start to bring Greece down from 101 on the World Bank’s ease of doing business index (behind Yemen and Guatemala) to nearer OECD levels.
So let the process run its course, play for time, and hope for the best. "A lot could change over the next year. Germany may even leave the euro," he said.
Ultimately, the choice is not an economic calculus. For a country on the Balkan fringes of Europe - cheek by jowl with the Ottoman nemesis - the European anchor has existential significance, just as it does for Estonia on the borders of Putin’s Russia.
"We Greeks have a European soul and a Middle Eastern soul, and there has always been a tension between the two," said prof Matsaganis. "If we are forced out of the euro, it would be a decisive blow to our anchoring in the European Project. Greece may never again be part of Europe in my lifetime or that of my children."
Judging by the current mood in the AAA creditor core, the decision will be taken for them.
A decision is expected on Monday but don't expect any negative surprises. Bloomberg reports, Iron Lady Merkel Bucks German Street on Greek Aid:
Strengthened by record-low joblessness at home, Merkel has rejected calls to either cut Greece loose from the euro area or ease her conditions for aid. By bucking the German street and steering the middle course, she is gambling that policy makers will continue to prevent a euro meltdown, helping her win re- election next year and match Thatcher’s third term.
“If Merkel were to go into elections with a collapsed euro zone she’d have a lot of difficulty winning,” Giles Merritt, head of Friends of Europe, a Brussels-based research group that promotes debate on the European Union, said in an interview. “Finally her statesman side is kicking in.”
Merkel may be homing in on her platform for the election next fall: enforcing the budget discipline that Germans want, while fending off the breakup of the euro area as too risky to contemplate for a country that has staked its post-World War II role in Europe on promoting consensus. She has quashed an anti- euro groundswell in her coalition, saying the solution is “more, not less, Europe.”
“I don’t want Greece to leave the euro, and therefore the question doesn’t arise,” Merkel, 57, told a student audience in Berlin on Feb. 7. The costs of a crack in the euro region are “incalculable,” she said.
Leaders in North America also have to do a lot more to fight the scourge of unemployment. And it won't be easy. The winds of austerity threaten a whole generation of workers and policymakers, foolishly pandering to banksters, are going to pay a heavy price for their intransigence. Too many people trapped in unemployment or under-employment are not being helped.
Below, the 60 Minutes clip that everyone must watch. Also embedded a clip of Too bad Mr. Schultz isn't running for office. He's the smartest CEO in America and he definitely has the "pulse" on what is ailing the country.
